“Interventions by the NSW and Victoria Governments have been particularly beneficial,” he says. “We urge other states to give serious consideration to similar measures.”

During October, the FHB share of owner-occupier home loans was highest in more affordable locations such as the Northern Territory (24.8%), followed by Western Australia (24.6%), the Australian Capital Territory (20.1%) and Queensland (19.7%).

RBA Explains Superstar Prices

Reserve Bank governor Philip Lowe has lent credence to the rise of the “superstar” city, a phenomenon featuring Sydney and Melbourne which appears to explain high house prices.

Lowe says it’s wrong to talk about “the Australian housing market”, referring to the disparity in performance among the capital cities, with the ratio of house prices to income having “moved up a lot” in Sydney and Melbourne but not in other cities.

“It’s interesting why that’s happening,” Lowe says. “My colleagues in other central banks are noticing a similar phenomenon in their countries, where you’ve got one or two cities where the price-to-income ratios have stepped up a lot but in most other cities in the country that hasn’t occurred.”

He nominated Auckland, Vancouver, Toronto, Stockholm, Amsterdam and San Francisco as other beneficiaries of this trend.

“Low interest rates have added to that but basically people are prepared to pay a lot more to live in certain cities,” he says.

Housing Construction On A High

The Performance of Construction Index increased 4.3 points to 57.5 in November, boosted by ongoing strength in house building activity and engineering construction.

The Australian Industry Group/Housing Industry Association index found that a strong rise in new orders saw house building hit its highest pace of growth in four months.

“House builders continued to be positive in their assessment of business conditions, noting sustained strength in customer demand, including rising first-home buyer activity,” the report says. “However, apartment builders cited relatively soft new orders and reduced investor activity.”

While apartment building activity continues to contract, the level of decline has eased with the sub-sector up by 0.9 points to 47.7 points in November.

“This activity reading was still well below the solid growth outcome – 68.5 points – recorded in May this year,” it says.

Affordability Package Praised

PowerHousing Australia, which represents 28 of Australia’s largest Community Housing Providers (CHPs), has welcomed Treasurer Scott Morrison’s commitment to a raft of measures that address housing issues.

The package is expected to include measures to aid new supply, create more social and affordable housing, support first-home buyers and assist seniors looking to downsize. PowerHousing says it has been a while coming but signals a step in the right direction for addressing affordability challenges.

PowerHousing CEO Nicholas Proud says adopting the UK bond aggregator model will open streams of institutional funds to increase the supply of social and affordable housing.

Quote of the week

“Although some of the heat has been taken out of the Sydney market, Melbourne, Hobart and Canberra are thriving, driving up total annual growth. The worst appears to be behind Perth’s markets and this is also contributing positively to the overall Australian performance.”

Knight Frank head of residential Sarah Harding, commenting on Australia’s rise to 7th place in the Global House Price Index